The Form W-4, Employee’s Withholding Certificate, tells your employer how much federal income tax to withhold from each paycheck. The 2026 version — updated by the IRS for the new OBBBA deductions (IRS 2026 Form W-4) — replaced the old allowances system with five steps tied directly to your tax situation. Most employees only need to complete Steps 1 and 5.
Overview of the Five Steps
| Step | What you provide | Required? |
|---|---|---|
| 1 | Name, address, SSN, filing status | Yes |
| 2 | Multiple jobs or working spouse | If applicable |
| 3 | Dependents and credits | If applicable |
| 4 | Other adjustments (income, deductions, extra withholding) | Optional |
| 5 | Signature | Yes |
Step 1 — Personal Information and Filing Status
Enter your legal name, address, Social Security number, and check one filing status:
- Single or married filing separately
- Married filing jointly or qualifying surviving spouse
- Head of household (unmarried and pay more than half the cost of keeping up a home for a qualifying person)
Your filing status is the biggest determinant of your withholding rate. Married filers withhold at a lower rate because the married brackets are wider (12% extends to $100,800 of taxable income vs. $50,400 for single in 2026 per Rev. Proc. 2025-32).
Step 2 — Multiple Jobs / Working Spouse
Skip this step if you have one job and your spouse does not work. If you have multiple jobs or are married and both spouses work, you have three options:
Option A (recommended): Use the IRS Tax Withholding Estimator at irs.gov/w4app. Enter the result in Step 4c as additional per-period withholding.
Option B: Complete the Multiple Jobs Worksheet on page 3 of the W-4 for the highest-paying job. Leave Step 2 blank on the other W-4(s).
Option C: Check the box in Step 2(c) to use the higher single withholding rate for a married filer. Simple but usually over-withholds.
The reason this step exists: if both spouses earn $50,000, their combined taxable income of ~$68,000 can push into the 22% bracket, but two separate W-4s set to “married” each treat the other as earning nothing. Without adjustment, combined withholding will be too low.
Step 3 — Claim Dependents
Enter dollar amounts here, not a count of people. For the qualifying child credit, multiply the number of children under 17 by $2,200 (the 2026 Child Tax Credit per Rev. Proc. 2025-32, §4.05). For other dependents (qualifying relatives, dependent adults), enter $500 per person.
The total in Step 3 divides across your pay periods to reduce withholding. A $2,200 entry on a biweekly paycheck reduces each check’s withholding by $2,200 ÷ 26 = $84.62. This approximates what the Child Tax Credit will save you at filing.
Only use Step 3 on one W-4 — the one for your highest-paying job. Leave it blank on secondary-job W-4s.
Step 4 — Other Adjustments
4a — Other income: Enter any non-wage income not already subject to withholding (interest, dividends, rental income, self-employment income). This causes your employer to withhold extra tax to cover it.
4b — Deductions: The 2026 W-4 Deductions Worksheet was updated to include lines for the new OBBBA deductions (IRS 2026 Form W-4, Step 4(b)):
- Line 1a — Qualified tips: If your total income is below $150,000 ($300,000 MFJ), enter an estimate of your qualified tips, up to $25,000.
- Line 1b — Qualified overtime: If your total income is below $150,000 ($300,000 MFJ), enter an estimate of the FLSA half-time premium portion of your overtime, up to $12,500 ($25,000 MFJ).
- Line 1c — Qualified passenger vehicle loan interest: If your total income is below $100,000 ($200,000 MFJ), enter an estimate of qualifying car loan interest, up to $10,000.
- Lines 3a/3b — Senior deduction: If you (or your spouse) will be 65 or older by December 31, 2026, and your total income is below $75,000 ($150,000 MFJ), enter $6,000 per qualifying person.
Filling in these amounts tells your employer to withhold less during the year, so you do not have to wait for a refund when you file. You can also enter itemized deductions, student loan interest, IRA contributions, and other above-the-line adjustments in the remaining lines of the worksheet.
4c — Extra withholding: Enter a flat dollar amount to add to each period’s withholding. Useful if you:
- Have a side gig with no withholding
- Got a large refund last year and want to redirect it to bigger paychecks (though zero extra withholding achieves that)
- Owe taxes from investment income
Step 5 — Signature
Sign and date the form. An unsigned W-4 is invalid.
When to Update Your W-4
The IRS recommends checking your withholding annually and after these life events:
- Marriage or divorce
- Birth or adoption of a child
- A major income change (raise, second job, losing a job)
- Buying a home (new mortgage interest deduction)
- Filing a return with a large refund or balance due
After submitting a W-4, changes typically take effect within one to two payroll cycles. Use the paycheck calculator to verify the effect before submitting.
Exempt From Withholding
You may write “Exempt” on line 4c only if you meet both conditions:
- You had no federal income tax liability in the prior year (zero tax owed after credits).
- You expect no federal tax liability in the current year.
Exempt status expires each February 15 — you must submit a new W-4 each year to maintain it. Most full-time employees do not qualify.